Barack Obama has openly criticised Zimbabwe's president, Robert Mugabe, and said he is "heartbroken" by the country's turmoil since independence.

The US president's unusually forthright comments are unlikely to soothe diplomatic tensions after his ambassador walked out of Mugabe's sister's state funeral in protest at an anti-western diatribe.

Obama, whose father was Kenyan, was addressing 115 young Africans at an event in Washington to mark the 50th anniversary of independence in many of their countries.

"I'll be honest with you," the American president said. "I am heartbroken when I see what has happened in Zimbabwe."

Responding to a question about sanctions, he said: "Mugabe is an example of a leader who came in as a liberation fighter and – I'm just going to be very blunt – I do not see him serving his people well."

The US and European Union have imposed financial and business restrictions on Mugabe and his allies, which Mugabe claims are sanctions that hurt the general population. He has demanded an end to the measures, but Obama made plain that political reforms have not gone far enough.

"In order to do that we've got to see some signal it will not simply entrench the same past abuses but will rather move us in a new direction that will help the people," he told the audience, many of whom were clad in traditional African garb.

Mugabe, 86, was forced into a power-sharing deal last year with the opposition leader, Morgan Tsvangirai, that has stabilised the economy after a decade of decline. But his policies are still deterring foreign aid and investment and Obama sounded sceptical that the unity government was yielding results.

"Tsvangirai has tried to work – despite the fact that he himself has been beaten and imprisoned – to see if there is a gradual transition that might take place. But so far the results have not been what we would have hoped."

It is not the first time Obama has spoken out against Mugabe. Last year, while presenting an award to Zimbabwean rights activists, he described the ageing leader as a "dictator". Other politicians tend to be less direct, with South Africa's Jacob Zuma among those refusing to condemn Mugabe outright.

The US is Zimbabwe's biggest aid donor but Obama's remarks came amid a growing diplomatic spat with the southern African state. Ambassadors from the US, EU and Germany were summoned to its foreign ministry to apologise for walking out after a speech in which Mugabe attacked the west.

The foreign affairs minister, Simbarashe Mumbengegwi, said the envoys left the National Heroes' Acre cemetery immediately after Mugabe's speech for the burial of his sister, Sabina. Protocol dictated that they should have stayed to the end of the proceedings and after Mugabe departed.

"I summoned the ambassadors to convey our concern and disappointment," Mumbengegwi said. "Their conduct was clearly very disrespectful of our national shrine, Zimbabwe, its leaders, its fallen heroes and its people," he said. Their actions, he said, were unacceptable.

The US ambassador, Charles Ray, said he refused to apologise for leaving the state funeral after the president told western nations to "go to hell" and alleged that they interfered in Zimbabwean affairs.

Ray said he followed normal diplomatic protocol in attending the funeral but added that when Mugabe began his invective, "we walked away as we were very disappointed in his conduct, so we have nothing to apologise for".

He added: "When America is treated in the manner it was treated on Sunday, I will react."

In a statement addressed to the minister, Ray added: "I followed the invitation in order to pay my respects. I earned disrespect in return. It became clear to me during your president's address that I was not welcome. I had to act accordingly."

Asked if he would apologise, Germany's Albrecht Conze said: "No. No. No. I thought this was a closed chapter. I am not sure why someone decided to open it again. We need to concentrate on solving Zimbabwe's problems."

Mark Canning, the British ambassador, who was abroad on the day of the funeral, said: "I was not at the event but I associate myself entirely with the actions of my diplomatic colleagues."

Aid agencies led by the UN have increased their appeal for help to Zimbabwe from an initial $378m to $478m (£240m to £300m), saying the country's humanitarian situation remains fragile.